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Speaker 1: This is Bloomberg Daybreak Europe for this Tuesday, the fourteenth

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Speaker 1: of March in London. Coming up today. Material weaknesses. Credit

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Speaker 1: Sweet says it's uncovered issues with its risk assessment process,

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Speaker 1: getting those eighties vibes to your Treasury yields remain on

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Speaker 1: edge after the biggest plunge in decades, pricing the peak.

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Speaker 1: Traders bet on a pivot after the first US bank

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Speaker 1: failure since two thousand and eight, plus our higher BOE

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Speaker 1: rates finally working. New data show that UK wage growth

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Speaker 1: slowing for the first time in more than a year.

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Speaker 1: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 1: views you need to start your day in just one

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Speaker 1: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 1: and everywhere you get your podcasts. Good morning from London.

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Speaker 1: I'm Stephen Carroll and I'm man At Edwards. You're listening

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Speaker 1: to Daybreak Europe. Credit Sweet says it's identified material weaknesses

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Speaker 1: in its reporting procedures for the last two financial years

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Speaker 1: and is adopting a plan to fix them. It's annual report,

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Speaker 1: released today says internal control over financial reporting was quote

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Speaker 1: not effective. Bloomberg's finance sayssor Tom Metcalf says, it's the

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Speaker 1: latest negative headline for credit suis. It is just a

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Speaker 1: listerallyer bad news. And in the last time that I've

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Speaker 1: come on and talked positively about creditor, that was Tom

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Speaker 1: Metcalf speaking to us earlier. Meanwhile, the bank's chairman, Axel Layman,

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Speaker 1: is to forego a payment of one and a half

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Speaker 1: million Swiss franks for his first full year in the

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Speaker 1: job after the bank reported its worst annual performance since

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Speaker 1: the two thousand and eight financial crisis. He yields on

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Speaker 1: two year treasuries falling again today after suffering the biggest

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Speaker 1: drop since the nineteen eighties. The failure of Silicon Valley

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Speaker 1: Bank and other small lenders has played a part in

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Speaker 1: pushing the yields down by more than a hundred basis

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Speaker 1: points over the three previous trading sessions. PIMCO Managing director

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Speaker 1: Jerome Schneider says the events have forced a shift in

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Speaker 1: trader bats for the fad. Well, obviously there's a change

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Speaker 1: in sentiment here and the sunderment is simply whereas the

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Speaker 1: inflation dynamic, people focusing on higher inflation with the FED

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Speaker 1: being on hold for longer was simply driving the terminal

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Speaker 1: rate much much higher. That's simply been recalibrated to not

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Speaker 1: necessarily that the Federal Reserve is going to get another

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Speaker 1: rate hike and more importantly might have to entertain rate

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Speaker 1: cuts over that point in time. The simple bondmath simply

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Speaker 1: says that that recalibration means you'll should be lower. Schneider

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Speaker 1: was speaking as global financial stocks have lost as much

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Speaker 1: as four hundred and sixty five billion dollars in market

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Speaker 1: value in the wake of spob's collapse. The first US

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Speaker 1: bank failures since two thousand and eight have turbocharged concerns

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Speaker 1: that more rate hikes will tip the global economy into

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Speaker 1: a recession. Goldman and others now expect the FED to

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Speaker 1: hold rates at its March meeting, but former US Treasury

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Speaker 1: Secretary Larry Summers disagrees. My guests would still be that

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Speaker 1: it will be appropriate for the Fed to move by

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Speaker 1: twenty five basis points at its meeting next week, though

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Speaker 1: conditions are always subject to change. Larry Summers was speaking

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Speaker 1: to Bloombergers. Traders turn their attention to today's USCPI print

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Speaker 1: Economists survey by bloom Berg Off Forecasting a month or

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Speaker 1: month increase. At zero point four percent, that would be

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Speaker 1: a deceleration from January's half percent increase. The shockwaves svb's

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Speaker 1: collapse of entered the political mainstream. To US President Joe

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Speaker 1: Biden says he intends to strengthen banking regulations. Americans can

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Speaker 1: rest assured that our banking system is safe, your deposits

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Speaker 1: are safe. Let me also assure you we will not

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Speaker 1: stop at this, will do whatever is needed. I'm going

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Speaker 1: to ask Congress and the banking regulators to strengthen the

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Speaker 1: rules for banks to make it less likely this kind

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Speaker 1: of bag failure would happen again, and to protect the

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Speaker 1: American jobs and small businesses. The Biden's team are yet

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Speaker 1: to lay out any policy details and what the tougher

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Speaker 1: regulation could look like. The collapse of SVB last week

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Speaker 1: is set to go down as the second largest bank

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Speaker 1: failure in US history. If it causes of financial crisis,

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Speaker 1: that could pose a major challenge to Biden ahead of

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Speaker 1: the twenty twenty four elections. And Prime Minister Wishi Sonak

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Speaker 1: also sought to reassure markets. I think the other Bank

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Speaker 1: of England governor was right and the chance of right

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Speaker 1: to address this and make it clear that actually our

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Speaker 1: banks are well capitalized and they don't have any concerns

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Speaker 1: about systemic risk. And as we've seen over the weekend,

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Speaker 1: we've been able to resolve the issue of Silicon Valley

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Speaker 1: Bank in the UK as it's been purchased by HSBC.

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Speaker 1: Sunak is currently in California, Silicon Valley Bank's home state.

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Speaker 1: In fact, as part of a visit to the United States,

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Speaker 1: he spent his flight there brokering the negotiation to sell

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Speaker 1: off svb's UK arm, protecting the six point seven billion

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Speaker 1: pounds it had in deposits. Well, the UK wage growth

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Speaker 1: has slowed for the first time in more than a year.

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Speaker 1: According to the ONS, average owning's growth excluding bonus has

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Speaker 1: fell to six and a half percent from a year earlier.

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Speaker 1: The data suggest an unpresdounded series of Bank of England

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Speaker 1: rate hikes. It's starting to be felt in the labor market.

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Speaker 1: Job vacancies felt by fifty one thousand during the three

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Speaker 1: months to the end of February. And those are our

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Speaker 1: top stories this morning. But of course, Anna, the newsic

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Speaker 1: end is sil very much being dominated by the far

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Speaker 1: out from SVB. I'm just I'm just watching sort of

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Speaker 1: almost from my own amusement, the two year treasury yields

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Speaker 1: just flick between, you know, falls and rising. It feels

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Speaker 1: like every time I look at it, it's completely different

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Speaker 1: than how it was. And bizarrely, we got some newslines

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Speaker 1: out of credit suites earlier on this morning, and such

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Speaker 1: is the fragility of these markets and the volactility of

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Speaker 1: these markets sensitivity. I suppose that that had a macro

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Speaker 1: impact and we saw the movement in two year yields

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Speaker 1: as a result. But are you playing this game seven,

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Speaker 1: which is to sort of tally the number of big

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Speaker 1: voices in the media saying we're heading for a financial

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Speaker 1: crisis and the number who are not. You know, it's

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Speaker 1: an interesting game to play. I saw Michael Burry, of

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Speaker 1: a big short fame. He does not think that we

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Speaker 1: are heading for some major financial crisis. I know our

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Speaker 1: markets life. Colleague Mark card More agrees that's comfort enough

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Speaker 1: for me. Well good, and I'm glad that you're taking

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Speaker 1: comfort from that. I know. The handford reading Mark Rubinstein's

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Speaker 1: piece on the Terminal about bank failure is he reminds

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Speaker 1: us that five hundred and sixty five banks have failed

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Speaker 1: in the past twenty three years, and I bet we

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Speaker 1: couldn't name very many of them if we tried, right

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Speaker 1: exactly between two thy eleven and twenty twenty. So this

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Speaker 1: is after the financial crisis. Banks collapsed at a rate

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Speaker 1: of around two a month. They weren't very big, but

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Speaker 1: they still collapse. True. I'm wondering how much they might

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Speaker 1: be Peggy banks anyway. Okay, let's move on from there

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Speaker 1: and talk more about the news on credit Suez this morning,

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Speaker 1: the lenders saying that it had identified these material weaknesses

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Speaker 1: and the reporting procedures for the last two financial years.

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Speaker 1: Our managing editor for EMA Finance, Michael Moore, joins us

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Speaker 1: now for more on this story. Michael, what does the

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Speaker 1: word material mean in this context and how much importance

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Speaker 1: should we be attaching to it? So it's not material

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Speaker 1: in the sense of the financial statements themselves. They said

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Speaker 1: the financial statements for twenty twenty two accurately reflect their status,

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Speaker 1: but it's more about the procedure to get there, and

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Speaker 1: there were not enough checks in place, and they need

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Speaker 1: to take steps to fix that, which they said could

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Speaker 1: be costly and time consuming. So it's more about the

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Speaker 1: process than the result. M Yeah, So if you if

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Speaker 1: you if you were things were very calm in markets,

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Speaker 1: and if there hadn't been a lot of drama around

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Speaker 1: credit squeezes recently, you could perhaps see a time where

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Speaker 1: that wouldn't have a negative impact on the business, because

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Speaker 1: they'd say, there were these issues with the process, but

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Speaker 1: the result wasn't too bad, so we'll fix the process

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Speaker 1: and everybody moves on. But the stock is down another

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Speaker 1: one point nine percent today on the back of substantial

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Speaker 1: falls yesterday, down by nearly ten percent by the clothes.

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Speaker 1: This is a really nervous market that this news falls into,

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Speaker 1: isn't it. Yes, as you say, this is not the

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Speaker 1: time for people to be questioning the process of how

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Speaker 1: you get to your numbers. So yeah, it's more about

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Speaker 1: that sentiment, the fact that Credit Suiss has just had

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Speaker 1: a series of bad news, more than it is this

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Speaker 1: particular issue. One of the other elements that we learned

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Speaker 1: from this report is that acts of layman. The chairman

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Speaker 1: is waiving his one and a half million Swiss francs

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Speaker 1: one point six million dollars, if you prefer it in

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Speaker 1: that way, of his first full year payment on the job.

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Speaker 1: How important is that given that credit speces you know

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Speaker 1: elsewhere and again money's try and retain top talent. Yeah,

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Speaker 1: I think it's showing solidarity with the management team who

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Speaker 1: didn't get a bonus this year. You know, this was

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Speaker 1: a catastrophic year for the bank in terms of its loss.

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Speaker 1: It's you know, the having to do another strategy reboot,

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Speaker 1: having clients step away. So I think that just shows

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Speaker 1: you know, the acknowledgment that it was a tough year

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Speaker 1: and you know, reflecting that over in the United States,

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Speaker 1: then the fallout from SVB continues. I think the FDIC

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Speaker 1: is still trying to find buyers for either it or

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Speaker 1: bits of it, and bits of the low book seem

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Speaker 1: to be attracting attention. Is that where this moves next,

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Speaker 1: because there's a regional banking part of the of the

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Speaker 1: US infrastructure seems very nervous still, it does, it does,

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Speaker 1: And it seemed like over the weekend they were pursuing,

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Speaker 1: you know, the path of trying to get one buyer

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Speaker 1: for the whole thing very quickly. That did not come together.

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Speaker 1: So it you know, they may get the most value

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Speaker 1: by selling it off in bits and pieces. The thing

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Speaker 1: with SVB is that, you know, part of its problem

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Speaker 1: was it had this huge book of securities motionally treasuries

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Speaker 1: and agencies that got hit by rate rises. But that

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Speaker 1: does make it a little bit easier to unwind because

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Speaker 1: those are easy to sell. And if that's more than

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Speaker 1: half of the assets, then you're not talking the same

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Speaker 1: level of you know, size needed Michael, Thanks very much.

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Speaker 1: Michael Moore joining us there with the latest on the

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Speaker 1: banking sector. Our managing it is a fault inmate final

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Speaker 1: with the latest on credit suites and the optima SVB. Well,

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Speaker 1: of course there's much broader market impact than this as

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Speaker 1: well as the collapse of SVB has led to repricing

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Speaker 1: of what traders think the Federal Reserve will do next.

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Speaker 1: We've been watching this I think I've described as an

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Speaker 1: interesting morning for treasuries. That to your treasury yield, if

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Speaker 1: you like to know how it's changed in the past

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Speaker 1: eleven minutes, is now up four basis points at four

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Speaker 1: point zero two percent. I mean I could have literally

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Speaker 1: picked any number out of a hat between one and

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Speaker 1: twenty this morning plus and change the integer as applicable

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Speaker 1: to see where it's moving. Our market supporter, Valerie Title

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Speaker 1: is here to make some sense of all of this

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Speaker 1: for us Valerie, what's happening. There is a big position

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Speaker 1: de risking and unwinding going on, which is causing this

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Speaker 1: market volatility. You have to remember it was only a

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Speaker 1: week ago the market thought they were going to have

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Speaker 1: to start hedging for six percent FED funds rate. So

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Speaker 1: the positioning washout has been causing this volatility. And we

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Speaker 1: still don't know whether all that positioning has been washed

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Speaker 1: out or do we see another big rally today in

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Speaker 1: the front end. Given the picture this morning, it's looking

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Speaker 1: quite confusing which way we're headed. But the confusion is

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Speaker 1: mirrored across the street. You only take a look at

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Speaker 1: the dispersion of Fed calls we've seen. We have MS

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Speaker 1: and City both holding to their fifty basis point rate

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Speaker 1: rise for the Fed next week, and then we have

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Speaker 1: Goldman Sachs Barclay's coming out saying this warrants a pause.

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Speaker 1: And then Nomura late last night calling for a twenty

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Speaker 1: five basis point cut, and not only that, an end

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Speaker 1: to their quantitative tightening program. So the street is as

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Speaker 1: confused as the market this morning. Okay, so the market

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Speaker 1: is a bit confused. We see movements of four basis

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Speaker 1: point which don't even touch the sites, Now do they,

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Speaker 1: Given that we've seen two year yields on treasuries down

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Speaker 1: by more than a hundred basis points in three sessions.

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Speaker 1: This is the big position in clear route that you

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Speaker 1: reference then at Valerie. So that's been the direction of travel,

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Speaker 1: unwinding all of the hawkishness of recent well, a lot

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Speaker 1: of the hawkishness of recent months. But let's remember that

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Speaker 1: the reason that we'd seen that hawkish positioning was because

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Speaker 1: CPI was proving to be stick core inflation readings. We

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Speaker 1: talked a lot about, you know, core services and what

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Speaker 1: that was doing in the US. We get that CPI

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Speaker 1: print later on today, Valerie. It's hard. It's hard to

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Speaker 1: think that it really moves well, that it can overrule

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Speaker 1: the the SBB story or counter it. But only the

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Speaker 1: other hand, it is what the Fed's monetary policy is

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Speaker 1: supposed to focus on. Yeah, I think if we get

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Speaker 1: anything remotely hot in this print today, the FED is

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Speaker 1: going to be in a massive pickle. The one thing

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Speaker 1: that is still on the FED side in terms of

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Speaker 1: their inflation fight is wage inflation. Last week's payroll print,

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Speaker 1: even though the headline number still came in hot, it

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Speaker 1: did not spur any further wage inflation. We're still seeing

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Speaker 1: wages moderate. That's a good sign for the FED. They've

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Speaker 1: really tied their inflation fight to the labor market into

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Speaker 1: this wage inflation. So if we somehow get a shred

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Speaker 1: of evidence in the CPI print today that maybe the

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Speaker 1: Core Services CPI comes in a teeny bit soft, I

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Speaker 1: do really think the echoes for a FED pause will

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Speaker 1: get louder today. The pickle comes if we get a

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Speaker 1: hot print and the FED is stuck between a rock

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Speaker 1: and a hard place of do I do something about

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Speaker 1: the massive tightening in lending conditions happening in the US

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Speaker 1: given this bank banking regional banking fallout, or do I

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Speaker 1: focus on the somewhat backward looking inflation data from last month?

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Speaker 1: You know, the FED will input some sort of tightening

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Speaker 1: of conditions into their models. Does it spit out a

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Speaker 1: lower growth rate, a lower a lower inflation rate, and

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Speaker 1: a high enough unemployment rate to warrant some sort of pivot?

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Speaker 1: Somehow I feel comforted thinking about the FED being in

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Speaker 1: a pickle rather than anybody being in any kind of

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Speaker 1: financial crisis. And see, and of course we won't know

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Speaker 1: because it's the black Eyed period. So they'll be stewing

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Speaker 1: in silence in their pickle juice and a word on

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Speaker 1: the global impact of this valerie. We're also looking at

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Speaker 1: repricing for the ECB as well. Yeah, yes, yes, which

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Speaker 1: is very surprising given how many times we have heard

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Speaker 1: from Laguard that they intend to rise by fifty basis

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Speaker 1: points on Thursday. Markets are now pricing in less than

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Speaker 1: half of that. One thing that I think will worry

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Speaker 1: the ECB is the widening that we've seen in bank

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Speaker 1: CDs credit spreads, so this is subordinated financials, senior financials.

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Speaker 1: The spread widening there has been rapid. Now a lot

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Speaker 1: of people on the street are claiming that is because

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Speaker 1: it's a positioning wash out. There's a lot of people

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Speaker 1: who got very long European banks on the narrative that

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Speaker 1: higher rates would would help their bottom line. Perhaps this

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Speaker 1: is just the positioning wash out of that. But it

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Speaker 1: is not a good sign for a central bank to

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Speaker 1: be hiking fifty basis points in the face of bank

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Speaker 1: CDs widening. I mean, that's unprecedented. So they are having

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Speaker 1: to tow a fine line on Thursday. Okay, A lot

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Speaker 1: of different parts of financial system trying to do different things,

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Speaker 1: sort of monitoring policy on the one hand, financial regulation

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Speaker 1: on the other. Thanks very much to our market report

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Speaker 1: Valerie Title. On the subject of SVB I wanted to

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Speaker 1: bring you a conversation that Caroline and I had with

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Speaker 1: Stephen Chandler. He's co founder and managing parodor at Notion Capital.

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Speaker 1: They have more than seven hundred million dollars in assets

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Speaker 1: under management, but they had one hundred and sixty seven

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Speaker 1: million pounds of portfolio company money frozen at SVB UK

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Speaker 1: over the weekend. We've been talking to him about what

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Speaker 1: the HSBC rescue means for tech funding and his own

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Speaker 1: risk appetite as a venture capitalist. So that is correct.

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Speaker 1: We were obviously collecting data from all of our portfolio

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Speaker 1: companies over the weekend, and that was the sum that

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Speaker 1: they had frozen in the bank. I can happily report

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Speaker 1: that it has now been unfrozen and there is access

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Speaker 1: to capital. Again. Have that not been the case, then

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Speaker 1: you know it was a significant threat to the eco system.

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Speaker 1: We actually had thirteen companies that we ranked as high

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Speaker 1: risk of some kind of need of support or insolvency

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Speaker 1: issues over the next month. Were they not able to

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Speaker 1: get access to their cash Now that HSBC has taken

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Speaker 1: over Silicon Valley Bank in the UK, will your portfolio

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Speaker 1: companies stay with them or are they going to move elsewhere?

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Speaker 1: I guess it depends on HSBC's plans for the business.

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Speaker 1: You know. Our hope is that they will continue to

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Speaker 1: deliver a kind of service that's tailored for the technology

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Speaker 1: industry and that supports tech companies, and there won't be

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Speaker 1: a big change in their kind of processes, systems, attitudes

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Speaker 1: from risk etc. After all, this was not an issue

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Speaker 1: that was created by the tech companies themselves. It wasn't

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Speaker 1: due to default or anything like that. This was a

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Speaker 1: good old fashioned bank run, if you like, but different

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Speaker 1: in many ways than some of the previous bank runs

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Speaker 1: we've seen, but caused by questionable investment strategy within s SVB.

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Speaker 1: So I hope that they will stay with them. I

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Speaker 1: think the lesson that they will have learned, however, though,

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Speaker 1: is to have a diversified banking relationship. One of the

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Speaker 1: things SVB did, which you know, with hindsight, wasn't good,

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Speaker 1: was that they tended to encourage their customers to only

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Speaker 1: bank with them, particularly if they had credit lines. They

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Speaker 1: insisted on that, and of course that led to a

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Speaker 1: huge amount of concentration risk with them. Okay, but overall

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Speaker 1: you think that this is a good outcome then for

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Speaker 1: UK tech. I mean, the government is clearly quite pleased that.

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Speaker 1: I like the US, the issue was wrapped up so swiftly,

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Speaker 1: and yet we were speaking to the City Minister Andrew

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Speaker 1: Griffith and he revealed nothing of whether any guarantees were

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Speaker 1: given to HSBC, you know, in order to take on

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Speaker 1: SVB UK you know, for a pound. But overall you

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Speaker 1: think it's a good outcome for UK tech, Yeah, I

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Speaker 1: think it's a It's a very good outcome, you know,

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Speaker 1: I think it was the best outcome we could have

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Speaker 1: hoped for in the circumstances. The announcement was clear that

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Speaker 1: there was no tax exposure or taxpayer exposure for UK

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Speaker 1: so you know, this was a deal that supported the

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Speaker 1: tech industry without having to be any kind of bailout

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Speaker 1: from the taxpayer. You know, Personally, I feel that HSBC

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Speaker 1: got a fantastic deal. You know, there are relationships with

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Speaker 1: some great companies there and as far as I'm aware,

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Speaker 1: their loan book has always been very strong, so I

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Speaker 1: think for the price that they paid, they've got a

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Speaker 1: fantastic deal and I think you know, if they continue

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Speaker 1: the service, the type of service that SVP provided, then

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Speaker 1: you know, I think it's a great outcome for UKPLC

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Speaker 1: and the tech center sector in the UK as well.

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Speaker 1: Do you think they will though, I mean, HSBC is

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Speaker 1: a very different beast from SVB, you know, it's it's

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Speaker 1: a big, traditionally conservative bank. Is there. Would you be

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Speaker 1: worried that perhaps they won't be as adventurous as the

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Speaker 1: likes of SBB were. Yes, yes, I am frankly worried

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Speaker 1: about that, and just as as tailored to their needs.

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Speaker 1: You know, the banking needs of these kind of companies

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Speaker 1: are quite different from the broader economy and that's certainly

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Speaker 1: a risk. And you know, SPB played a very very

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Speaker 1: important role in the ecosystem providing core banking services, but

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Speaker 1: also as one of the pre eminent lenders to the

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Speaker 1: industry in terms of venture debt and other debt products

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Speaker 1: that they provided, which again are very different than you

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Speaker 1: get in conventional kind of profitable businesses. So, you know,

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Speaker 1: I think that would be a challenge for the ecosystem

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Speaker 1: to make up their that gap. There are a number

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Speaker 1: of other providers out there for venture debt, but the

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Speaker 1: gap between them and STB was very, very significant. We

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Speaker 1: talked to a lot of startup businesses in the UK recently.

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Speaker 1: I was up in Cambridge speaking to people who kind

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Speaker 1: of power tech startops in Britain out of the Golden Triangle.

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Speaker 1: They were absolutely damning about this government's strategy, the missing

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Speaker 1: semiconductor strategy, the fact that you know, not enough has

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Speaker 1: been done to support tech businesses in the UK and

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Speaker 1: yet this looks like a win for Hunt and Soon Act.

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Speaker 1: Does this change your mind in terms of the UK

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Speaker 1: Government's attitude and ability to deliver for UK tech, Well, yeah,

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Speaker 1: I think we need to celebrate the successes that we've

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Speaker 1: had and you know, credit to the industry, the technology industry,

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Speaker 1: the VC industry for coming together and making sure people

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Speaker 1: were aware of the existential threat that this created. But

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Speaker 1: then huge credit also has to go to the government,

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Speaker 1: to the Prime Minister, to the Chancellor, the Bank of

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Speaker 1: England as well for you know what was very swift

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Speaker 1: and divisive, decisive action. So U you know, Q loss

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Speaker 1: for that. In terms of the longer term question, I

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Speaker 1: think you're right, there are there are lots of holes

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Speaker 1: and challenges. The language is the right language. You know.

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Speaker 1: I think the Prime Minister is supportive of the industry

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Speaker 1: and recognizes what an important role that can play. But

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Speaker 1: you need thing, we need to see, you know, more

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Speaker 1: actions across the board to support it. And I'm wondering

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Speaker 1: what was your weekend, like, what talk us through kind

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Speaker 1: of how you saw this story unfolding, what you were

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Speaker 1: doing over the weekend to manages and also I suppose

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Speaker 1: how you felt about it given the scale of impact

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Speaker 1: this has. Well, Yes, as you probably guessed, it was

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Speaker 1: pretty miserable. So I guess it started last week on

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Speaker 1: Wednesday and Thursday. Actually on Thursday, I was sitting around

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Speaker 1: the table with some other VC investors and you know,

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Speaker 1: this is indicative of the challenge we have these days,

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Speaker 1: because people's phones were just pinging every you know, a

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Speaker 1: few seconds with concern founders, concerned other vcs. The way

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Speaker 1: that this spread around, the news spread around the market

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Speaker 1: was you know, exceptionally fast. I think that's what made

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Speaker 1: it very different from any kind of bank run that

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Speaker 1: we've seen before. You know, the ease with customers can

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Speaker 1: withdraw cash these days from from a digital bank. You

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Speaker 1: don't need to go and queue up, etc. And the

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Speaker 1: speed at which the news travels, both both of which

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Speaker 1: travel with you know, zero distribution costs so very very

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Speaker 1: quickly and without friction, and that's why you saw such

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Speaker 1: an enormous amount of money move forty two billion in

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Speaker 1: ten hours of banking, I believe, which is just a

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Speaker 1: massive order of magnitude, bigger than anything else we've seen

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Speaker 1: a million dollars a second. And so over the weekend

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Speaker 1: we were scrambling to capture data from all of our

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Speaker 1: portfolio companies, who are you know, fantastically responsive. But these,

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Speaker 1: you know, these these are people's livelihoods. You know, there

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Speaker 1: was a lot of emotion with people feeling that this

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Speaker 1: is their money, which absolutely it is and they should

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Speaker 1: have ready access to it, and feeling that their livelihoods

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Speaker 1: work threats. So you know, our job as VCS is

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Speaker 1: to do more than just provide capital. We try and

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Speaker 1: provide support and insight and help, and we were doing

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Speaker 1: a lot of that the weekend. Obviously, will your business

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Speaker 1: have to change significantly as a result of this, I mean,

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Speaker 1: obviously ASPB is it is a huge last to this actor. Yes,

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Speaker 1: you know, I suspect it will. The truth is, we don't,

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Speaker 1: we don't really know yet, you know, I think if

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Speaker 1: we have far less access to that that capital, which

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Speaker 1: you know, has a lower cost of capital and equity

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Speaker 1: funding and improves the overall cost of capital the industry.

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Speaker 1: If if that goes away and the cost of capital

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Speaker 1: goes up, then you know, by definitions, valuations come down

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Speaker 1: and the ability to create value becomes harder. There may

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Speaker 1: also be pressure to not hold assets as long, you know,

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00:23:45,920 --> 00:23:49,120
Speaker 1: in order to provide liquidity back to our investors and backers,

433
00:23:49,480 --> 00:23:52,199
Speaker 1: you know, which which it self creates a challenge for

434
00:23:52,760 --> 00:23:55,280
Speaker 1: the tech ecosystem in industry. Is actually what we want

435
00:23:55,320 --> 00:23:57,920
Speaker 1: in the UK is we don't want our very best

436
00:23:57,920 --> 00:24:01,840
Speaker 1: companies selling out. We want them remaining independent companies, whether

437
00:24:01,880 --> 00:24:06,360
Speaker 1: that's public or private, but remaining a standalone entity and

438
00:24:06,040 --> 00:24:09,480
Speaker 1: build building large scale tech companies for the future, something

439
00:24:09,520 --> 00:24:13,520
Speaker 1: that the US has done very successfully. So you know,

440
00:24:13,560 --> 00:24:17,480
Speaker 1: anything that hampers that will be to our detriment. Yes,

441
00:24:17,560 --> 00:24:19,800
Speaker 1: I think that's really interesting that you make that point

442
00:24:20,240 --> 00:24:23,640
Speaker 1: that you're backing UK tech, the growth of UK UK

443
00:24:23,800 --> 00:24:28,359
Speaker 1: tech and UK tech remaining within Britain. I mean, is HSBC,

444
00:24:28,480 --> 00:24:31,439
Speaker 1: which is a very Asian focused bank, the best custodian

445
00:24:31,520 --> 00:24:34,840
Speaker 1: I would ask, and also I suppose maybe what do

446
00:24:34,840 --> 00:24:36,639
Speaker 1: you want from the budget on that the kind of

447
00:24:36,720 --> 00:24:40,280
Speaker 1: overall view of the tech sector, as you were explaining

448
00:24:40,320 --> 00:24:43,280
Speaker 1: so nicely that you speak to on a daily basis,

449
00:24:45,720 --> 00:24:49,840
Speaker 1: you know, I think HSBC was a certainly a very

450
00:24:49,920 --> 00:24:54,719
Speaker 1: good outcome. What we needed was people to feel safe

451
00:24:54,720 --> 00:24:57,520
Speaker 1: and secure, not not just for the tech industry, but

452
00:24:57,640 --> 00:25:03,560
Speaker 1: also you know, any kind of systemic implications or flows

453
00:25:03,600 --> 00:25:06,200
Speaker 1: into other parts of the banking sector. And I think

454
00:25:06,560 --> 00:25:10,600
Speaker 1: you know, HSBC clearly has that that balance sheet strength

455
00:25:10,640 --> 00:25:14,439
Speaker 1: and that brand, so I think to that extent it

456
00:25:14,480 --> 00:25:18,600
Speaker 1: was it was a good choice. Obviously, it is also

457
00:25:18,640 --> 00:25:22,359
Speaker 1: an Asian bank and you know that that creates some

458
00:25:22,440 --> 00:25:25,800
Speaker 1: challenges as well. But you know, tech is a global

459
00:25:25,840 --> 00:25:29,320
Speaker 1: industry and needs to address global challenges, and so I

460
00:25:29,359 --> 00:25:31,399
Speaker 1: think having a global perspective will actually be a net

461
00:25:31,440 --> 00:25:36,960
Speaker 1: positive as regards the budget. Yeah, waiting to see what

462
00:25:37,119 --> 00:25:40,680
Speaker 1: that holds. Obviously, you know, some of the signals around

463
00:25:40,720 --> 00:25:42,520
Speaker 1: some of the very important things to us in the

464
00:25:42,560 --> 00:25:44,879
Speaker 1: tech industry in the UK, like for example, as and

465
00:25:45,000 --> 00:25:51,480
Speaker 1: SCIS relief appeared to be positive and you know, we're

466
00:25:51,520 --> 00:25:53,720
Speaker 1: grateful of the actions of the last week. As I said,

467
00:25:53,800 --> 00:25:56,359
Speaker 1: so looking forward to seeing what else there is in

468
00:25:56,400 --> 00:26:00,880
Speaker 1: that has your risk appetite changed in the past week. Yes,

469
00:26:01,119 --> 00:26:03,280
Speaker 1: I mean, we're in the business of taking risks, so

470
00:26:03,480 --> 00:26:05,760
Speaker 1: our job is to assess risk on be half of

471
00:26:05,760 --> 00:26:08,560
Speaker 1: our investors and try and make good decisions. But when

472
00:26:08,560 --> 00:26:13,520
Speaker 1: you're faced with these kind of issues and threats, obviously,

473
00:26:13,560 --> 00:26:16,399
Speaker 1: if you're your appetite for risk is hampered whilst you

474
00:26:16,800 --> 00:26:18,919
Speaker 1: gauge them and understand them, and that's what we've been

475
00:26:18,920 --> 00:26:23,320
Speaker 1: trying to do. And I think whilst that happens, people

476
00:26:23,560 --> 00:26:28,680
Speaker 1: inevitably put hit pause to a certain extent. So we're

477
00:26:28,720 --> 00:26:32,520
Speaker 1: obviously not engaging as much with new potential investments as

478
00:26:32,520 --> 00:26:34,560
Speaker 1: we otherwise would be because we're spending a huge amount

479
00:26:34,560 --> 00:26:36,439
Speaker 1: of time with our portfolio and checking that they're all

480
00:26:36,520 --> 00:26:40,159
Speaker 1: right and understanding the risks that they face at the moment.

481
00:26:40,480 --> 00:26:43,720
Speaker 1: So there will definitely be implications, but you know, equally,

482
00:26:43,720 --> 00:26:46,800
Speaker 1: the speed with which it's been addressed, thankfully getting done

483
00:26:46,800 --> 00:26:48,520
Speaker 1: over the weekend so that we didn't have to go

484
00:26:48,560 --> 00:26:50,440
Speaker 1: through Monday with this issue, which I do think would

485
00:26:50,440 --> 00:26:54,520
Speaker 1: have been, you know, truly truly damaging to the industry.

486
00:26:54,760 --> 00:26:57,480
Speaker 1: The speed with which it han't does mean you know,

487
00:26:57,520 --> 00:26:59,119
Speaker 1: we hope to get back to business as usual as

488
00:26:59,160 --> 00:26:59,920
Speaker 1: soon as we can write